So what is the exact licensing issue with the empeg and windows media player files?

They are not at liberty to discuss it because it involves private contracts between Microsoft and SonicBlue. However, if you think about it for a moment (think hard now... what is one of the features of the empeg and how software is developed for it...) you could probably figure out what the issues were.

I think the issues have been worked out by now and we'll probably see WMA in the next public beta. That's my guess.